Mercadante to Dora: "Inflation is under control"
The Minister of Education reminded the journalist from Estado that the rise in food prices was a result of crop failure and said that prices are already falling; furthermore, since the target system was instituted, the rate has only been below 5,5% in three years.
247 - Brazilian Minister of Education and economist Aloizio Mercadante indicated today, in an interview with journalist Dora Kramer, that inflation is under control and will close the year within the target of 6,5% per year – which may eliminate the need for an interest rate hike at the Monetary Policy Committee meeting that begins today. Read below:
Attention, concentration - Dora Kramer
Minister of Education, economist, a highly valued stock in the betting market for potential PT candidates for governor of São Paulo, and lately a constant presence alongside President Dilma Rousseff at public events or private meetings (not necessarily related to his ministry), Aloizio Mercadante is a confident man.
And, above all, optimistic. While all accounts of the prevailing mood in the Presidential Palace and its surroundings point to growing concern regarding the electoral effects of inflation reaching people's tables, Mercadante says the government is "confident" that its main assets for the 2014 election will be preserved.
These assets are widely known: employment and income. What is unknown is to what extent, and when, the fall in productivity, the rise in prices, and low growth will ultimately affect this asset.
Most analysts warn that without a strong and decisive reaction from the government, worse days for the economy will inevitably come. With them, the likelihood of even less encouraging news than the current situation for President Dilma's re-election increases.
That's not what Mercadante thinks, nor, according to him, is it what prevails in government analyses. As he stated in a recent interview with Estado, the minister believes that the GDP figures will not be decisive in shaking the positive mood of the population so far, as recorded in the polls.
"In the perception of the average citizen"—let's be clear, the electorate—"the translation for GDP is employment and income." As long as these two indicators remain high, the president's popularity will also remain high. "That's what gives social support to the government," says the minister, who, regarding the economic downturn, doesn't foresee bad times in political terms on the horizon, much less a clear path for the opposition.
In truth, he doesn't see any current problems. In his view, they are temporary "inconveniences" that need to be resolved before they can turn into potential electoral setbacks.
The minister even makes an ironic comparison: "The PSDB is starting to look like the PT during the Real Plan era." The irony lies in the fact that Aloizio Mercadante was one of the PT advisors who assured the party that the Real Plan had no chance of succeeding.
The only real challenge for the government, according to Mercadante, is the need for investment in workforce training as a way for the country to cope with greater growth.
He has no doubt whatsoever that the gross domestic product index will be higher in 2013 (a feat not too difficult given the less than 1% in 2012) nor does he express major concerns about a possible loss of control in the fight against inflation.
"There won't be, and it will go down. In fact, it's already going down, since the rise in food prices resulted from problems in the agricultural harvest, which peaked in October." According to him, strictly speaking, there is no reason for major fears given the exceeding of the target and the accumulated increase of 6,59% in the last twelve months.
"Since the implementation of the inflation targeting system, inflation has only been below 5,5% in 2006, 2007, and 2009."
High prices. The rise in prices gave the opposition a rallying cry. "Food inflation" is the name of the game, a phrase repeated time and again by Senator Aécio Neves, the PSDB candidate to oppose Dilma.
By margins. The minuscule margin of victory by which Nicolás Maduro was elected leaves him with little room for maneuver to govern Venezuela using the instruments of Chavismo's manipulation. These instruments are insufficient on their own and, without their creator, ineffective in dealing with the harsh reality of inflation, shortages, and rising crime.